Healthcare Mandates

Sen. Orrin Hatch (R., Utah), the ranking member of the Senate Finance Committee, is prepping on that front. “By attacking the mandates, we take away the Democrats’ arguments against our calls for full repeal,” he explained to NRO last year. “Focusing on the mandates enables us to shine a light on the most unconstitutional aspects of this lousy piece of legislation. It compels them to talk specifics. Let’s remember that these mandates are the central tenets of Obamacare. Gut them and the law falls apart.”

Everyone seems to be saying that ObamaCare will fall apart without the mandates but I don’t quite understand why.

Here is the way it looks to me:

If all you wanted was to cure the adverse selection problem inherent in insurance then you could require everyone to get insurance, require insurers to offer everyone insurance at the same price and then declare victory.

However, there are also subsidies in the plan to offset the cost of insurance. Once you have subsidies the entire game changes. You effectively enroll every American taxpayer in the payment pool. Even if you don’t buy insurance yourself, you can’t get out of paying part of the tab for the nation’s health care because you can’t get out of paying taxes.

So what happens if you take away the mandate? Lets say the system unravels. More and more people drop their insurance knowing that they can just buy insurance right before they need it. This causes the price of insurance to skyrocket, which causes more people to drop out and prices to rise further and so on until almost everyone drops out.

OK, but here is where the subsidies kick in. As the price of insurance rises it becomes less affordable for the average American. To keep insurance affordable the public demands larger subsidies. So as more people drop out subsidies rise and rise.

The end game in this type of scenario is fully government financed universal health care. People only “officially” enroll in insurance right before they need it, but because they are paying taxes they are always unofficially a part of the payment pool.

Rather than destroying ObamaCare it would seem that taking away the mandate turns it into Medicare Advantage for all.

Now maybe you would say, but Congress can refuse to fund the subsidies. Yet, failing to increase subsidies would increase costs for the people who are officially enrolled, which in our scenario are the people who need immediate care.

Allowing costs to skyrocket on people who need care immediately seems like a really unpopular idea.

Now, I can see how the whole thing would be extremely embarrassing for ObamaCare supporters and how the news media would hound them about their unrealistic cost estimates.In the end, however, it seems likely that the subsidies would be provided and the system would evolve into Medicare Advantage for all.

5 comments

I think the unmentioned reason why this idea does not gain traction is that the Health Insurers who have been funding the Republican fight against HCR would hate to lose just the mandate. For them, the requirement is take all customers is bad, but is partially offset by the mandate. For them it is either repeal the whole thing or keep it all. Thus not surprisingly there is no real momentum from Republican’s to repeal just part of HCR.

The end game in this type of scenario is fully government financed universal health care. People only “officially” enroll in insurance right before they need it, but because they are paying taxes they are always unofficially a part of the payment pool.

I suspect you would hit a series of roadblocks with the implementation of new levels of subsidy, although I can’t see the “no pre-existing conditions” law being repealed.

I’m interested in what this would do on the “supply” side of things. It seems like the type of thing that might trigger massive consolidations in the health insurance business, since they’ll then be better able to weather the losses from the sick they can’t get rid of. End result would be insurance monopolies in every state, or possibly monopoly at the federal level if some of the interstate sales barriers get eliminated (and the government doesn’t slap them with anti-trust suits).

Dude, are you just *now* catching on that this was the plan all along? How long have you been following politics, twelve days?

They knew they couldn’t get what they wanted (government single-payer health care a la the UK etc) so they set up a “compromise” that they knew would fail and, in the failing, make any other solution to the failure unworkable.

There will probably be some intermediate steps, a few of which may actually make sense (e.g. allowing much more interstate selling of insurance) but the end is now a foregone conclusion.

And ObamaCare *as it is currently structured* will fall apart without the mandate. Your solution would fix the problem of losing the mandate, but that wouldn’t be ObamaCare as it is currently structured. The reason is that if we kept just what we have now but took away the mandate, exactly what you say would happen would happen and health insurance would rapidly become unaffordable to almost everybody, or else the insurance companies would go broke trying to follow the law.

Eh, I have plenty of faith that come crisis time, roughly half the country would be quite able to convince itself that all these people who aren’t insured and need expensive care immediately are in that situation through their own faults. Therefore increase of subsidies is far from a sure thing.

There are plenty of things to blame: fatness (and its cousins poor nutrition and sloth), poor financial planning, slacking off in school (leading to low income), etc. In fact, see any “debate” on health care today, and you’ll likely see these things come up.

They knew they couldn’t get what they wanted (government single-payer health care a la the UK etc) so they set up a “compromise” that they knew would fail and, in the failing, make any other solution to the failure unworkable.

It was going to happen anyways. The employer-provided insurance system was slowly disintegrating, so we were either going to build a plan around private insurance a la the ACA, or let the whole thing collapse and then build up single payer insurance from the wreckage (namely, when a whole ton of people get dumped into the individual market and suddenly discover that they can’t find insurance except at very high prices).